In this course, we’ll focus on the six types of businesses that exist. When an owner establishes a business, the owner chooses the
BUS 508 Explore Activity Discussion What is Business Week 1
STRAYER TALKS: WHAT IS BUSINESS?
No, Seriously…What is Business?
You’ve heard it at least twice already in this course: A business is an organization that creates and sells goods and services to customers. But you’ve been in the business world long enough to know it’s not really that simple, so let’s unpack that a little bit more.
A BUSINESS IS AN ORGANIZATION…
Often, a business is made up of multiple people working together. That organization can be a really big corporation and have tens of thousands of people working all around the world. Chances are, you work in a company with at least 20 employees–more than 3 in 4 Americans do. In this setting, as you know, professional success is defined by effectively owning and growing whatever part of the business you find yourself in. This contributes to the overall success of the organization. A business can also be a small storefront, perhaps run by two friends who have always had a dream to make something they love and sell it to their community. Here, the importance of understanding all aspects of business is even greater, as these business people are often required to wear multiple functional hats. Moreover, as you may already know, the majority of the businesses here in the U.S. are sole proprietorships–a business run by just one person. They are the consultants and massage therapists and wedding photographers and artists that go at it on their own. Almost 24 million businesses are really run by just a single person.In addition to these one-person businesses, there are almost six million businesses in the U.S. that have at least one employee. The charts below show the percentage of businesses by number of employees and the percentage of U.S. workers based on the size of the company they work for.Although we tend to think of businesses as large, complex organizations, the truth is that a lot of them are just a few people with a big vision to bring something great to their customers. While there are many small businesses like this around the country, most of the money generated in the U.S. economy is made by the larger businesses. Think Google, GE, or ExxonMobil. With these businesses, there is an amplification effect that happens. The sum of all the activity happening in these large corporations creates significant value “at scale.” If would take a lot of one-person businesses to equal the value of Google, for example. The work is just too complex and requires too much team collaboration for even a large number of one person businesses to be able to create the kind of value in the market that Google does. That’s why large businesses have an outsized impact on the overall economy. Yes, small businesses drive a tremendous amount of day-to-day activity that is essential to the lives of countless people. But, the net effect of large business is what causes seismic shifts in economic growth and financial markets.
…THAT CREATES AND SELLS GOODS AND SERVICES…
Every business, regardless of its size, exists to produce something and sell it to its customers. That thing might be simple, such as candles or bicycles or art supplies. It could be large or complex, such as heavy construction equipment, airplanes, or computers. Businesses can also sell services, such as healthcare, dry cleaning, architectural design, or business consulting.
…TO CUSTOMERS.
Often, a business’s customer is a single person or a group of people. A customer enters a shop to buy a sandwich or a watch for a spouse. A business can also sell movie tickets to a group of friends. Businesses that sell their products to customers are called “Direct-to-Consumer” businesses, or D2C for short. Sometimes, the customer is also a business. For example, one business might sell engine parts directly to a car manufacturer, which is a second business. This is known as “Business-to-Business” sales, or B2B. The carmaker buys the engine parts from the business to use in the making of its product—the car. Regardless of whether it’s a person or another business, a customer is simply the purchaser of a product.
LOOKING BACK: HOW BUSINESS BEGAN
“We can trace the origins of business to the very foundations of human society. When Homo sapiens evolved, mankind left behind the nomadic hunter-gatherer lifestyle to become farmers. This allowed for specialization of work, where individuals would become skilled at specific tasks to serve a particular community need. Over time, this enabled more complex goods and services to be produced and traded, in order to provide for all members of society. Thus, human society has been engaging in “business” for thousands of years.”— HOW BUSINESS WORKS, INTRODUCTION, PP. 8–9
QUICK QUESTION:
Think of your current or former employer. Is the company D2C or B2B? Would it be possible to target both individual consumers and other businesses as your customers? Why or why not?
Types of Businesses
In this course, we’ll focus on the six types of businesses that exist. When an owner establishes a business, the owner chooses the legal structure that best suits the business. Take a look at the table below, which summarizes the six types of businesses and why an owner might choose them.
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